W20: Wine Update

In W20 in the wine landscape, Portuguese wine exports totaled USD 227.26M in Q1 2023, with an average price of USD 3.08/litre representing a decrease of 0.95% YoY in value and 3.28% YoY in volume but an increase of 2.41% YoY in the average price. Wine exports to the US had the highest value of USD 27.04M, followed by France with USD 25.74M and Brazil with USD 16.22M. Additionally, exports to the Russian and Ukrainian markets saw a sharp increase in value, by 84.56% YoY and 72.85% YoY, respectively, compared to Q1 of 2022. Despite a drop in export volume, 2023 is expected to be a positive year for Portuguese wines, as sales in the first quarter of the year are always slow due to the stock remaining from purchases made over the holiday season in the previous year. The European Committee of Wine Companies (CEEV) and Spirits Europe filed complaints to request that the European Commission open an infringement procedure against new alcohol labelling legislation in Ireland. The measures, announced in June 2022, would see alcoholic beverage labels adorned with warnings about the health risks of excessive alcohol consumption, which is incompatible with EU law.

In Russia, light domestic wines, petnates, oranges, and roses are in vogue, while the demand for strong liquor decreased. Consumption of domestic wines has increased as a result of supply chains disrupted by the withdrawal of foreign brands from Russia and the sanctions. For instance, top wine importing destinations like France, Italy, and Spain saw a decline in their market share. The share of Russian wine in the domestic market is almost 60% in Q1 of 2023, increasing by 6.4% YoY in public catering, and 3.6% YoY in retail. Additionally, public catering imported 3.5% fewer wines on average in Q1 of 2023. Restaurants purchased 6% more wine overall compared to other strong alcoholic beverages. The demand for vodka dropped on average by 0.2%, while it rose for champagne by 7.6% and liqueur wines by 149.4%. The total volume of sales of alcoholic beverages, excluding beer, increased by 3% YoY to 70.99M decalitres. Sales of low-alcohol products increased by 17.3% YoY to 5.584M decalitres.

In the South American market, Argentina had a hot summer in 2023, with hailstorms, and frosts in late October and early November, just before harvest. The grapes harvested were the lowest since 1960, at 1.58 MMT. Despite the low harvest volume, many winemakers are satisfied with the quality of their fermentations' output. In the meantime, 2023 in Chile will be remembered for the fires that broke out in February due to prolonged drought and unusually high temperatures. These fires destroyed numerous vineyards with a long history of Chilean winemaking in the coastal regions of Itata and Bío Bío. Even so, Chile's wine production primarily comes from the central regions around Santiago, including the Maipo and Colchagua Valleys, which were unaffected by fire and smoke. Lastly, the National Coalition of Viñateros de Chile denounces that large wineries collude to set prices for fine vines that do not cover production costs, putting wine SMEs at risk and called for action against such practices.

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